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Explaining Focal Points: Cognitive Hierarchy Theory "versus" Team Reasoning

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  • Nicholas Bardsley
  • Judith Mehta
  • Chris Starmer
  • Robert Sugden

Abstract

This article reports experimental tests of two alternative explanations of how players use focal points to select equilibria in one-shot coordination games. Cognitive hierarchy theory explains coordination as the result of common beliefs about players' pre-reflective inclinations towards the relevant strategies; the theory of team reasoning explains it as the result of the players' using a non-standard form of reasoning. We report two experiments. One finds strong support for team reasoning; the other supports cognitive hierarchy theory. In the light of additional questionnaire evidence, we conclude that players' reasoning is sensitive to the decision context. Copyright © The Author(s). Journal compilation © Royal Economic Society 2009.

Suggested Citation

  • Nicholas Bardsley & Judith Mehta & Chris Starmer & Robert Sugden, 2010. "Explaining Focal Points: Cognitive Hierarchy Theory "versus" Team Reasoning," Economic Journal, Royal Economic Society, vol. 120(543), pages 40-79, March.
    • Handle: RePEc:ecj:econjl:v:120:y:2010:i:543:p:40-79
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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